British banks ban buying of bitcoin with credit cards

Britain’s biggest lender, Lloyds Banking Group Plc, has disclosed that it would ban its credit card customers from buying crypto currencies.

Reuters reported on Monday that the development, which followed the lead of U.S. banking giants JP Morgan Chase & Co (JPM.N) and Citigroup (C.N), is aimed at protecting customers from running up huge debts from buying virtual currencies on credit.

A Lloyds spokesperson said that customers may run into debt if their values were to plummet.

There have been concerns among credit card providers because their customers have increasingly been using credit cards to fund accounts on online exchanges, which are then used to purchase the digital currencies.

On Monday, the biggest and best-known crypto currency fell by six per cent to $7700 on Bitstamp, extending losses from Friday amid worries of a global regulatory clampdown.

Last week Mastercard Inc (MA.N), the world’s second biggest payments network, said customers buying crypto currencies with credit cards fueled a one percentage point increase in overseas transaction volumes in the fourth quarter.

In December, Bitcoin attracted global interest when it staged a spectacular rise in value, reaching a peak of $19,187 on the Luxembourg-based Bitstamp exchange.

Reuters reports that a spokesperson for Chase bank said the bank is not currently processing credit card purchases of crypto currencies because of the volatility and risk involved, while a Citi spokesperson confirmed a similar ban, but did not give a reason.

The spokespersons however assured that the bans extend only to credit card purchases, with debit card users still able to buy crypto currencies.

Earlier, British Prime Minister Theresa May had said Britain should take a serious look at digital currencies such as Bitcoin because of the way they can be used by criminals.

Last week, the Nigerian Senate warned Nigerians against investing in bitcoin and urged the Central Bank of Nigeria, Nigerian Stock Exchange and the Nigerian Deposit Insurance Corporation to launch awareness campaigns on the business.

The Senate also resolved to urge the CBN, NDIC and the NSE “to make an unequivocal statement across all the news platforms in all dialects on the dangers of bitcoins as a store of value in Nigeria.”

It also called on the National Orientation Agency to “spread the news against all forms of wonder banks and ponzi schemes operating in Nigeria.”